MNI EUROPEAN OPEN: USD Falls Further Following Fed, A$ Outperforms On Strong Jobs Data

US TSYS: Tsys Futures Little Changed, Yield 1-2bps Lower, Job Claims & PMI Ahead

• Jun'24 10Y have had a fairly quiet session with range tight and well within Wednesday, we made earlier morning lows of 110-12+ before pushing higher to trade at 110-17 and currently trade just off these level to be + 01 for the day at 110-15, while the 5Y futures are largely mimicked the moves up + 00¾ to 106-30¾
• Looking at technical levels: The 10Y traded lower Monday piercing 109-25+, reinforcing a bearish theme. A clear break of this support would confirm a resumption of the downtrend that started late December levels to watch to the downside 109-24+ (Mar 18 low), further down 109-14+ (Nov 28 low), while to the upside initial resistance is seen at 110-24 (20-day EMA), while above here 111-02 (50-day EMA), a break above here would open a retest of 111-24 (Mar 12 high),
• Treasury curve are flatter today, with yields 1-2bps lower, the 2Y now -1.5bps to 4.587%, 10Y -0.8bps to 4.260%, while the 2y10y is +0.712 to -32.452.
• Yellen is to testify before senate panel on FY25 budget at 10am ET, while she is then testify before House Panel at 2.30pm ET.
• Looking ahead: focus turns to Thursday's Wkly Claims, S&P Global US PMIs, Home Sales. Fed VC Barr fireside chat "View from the Fed", Q&A at 1200ET.

JGBS: Futures Holding Weaker, National CPI Data Tomorrow

In the Tokyo afternoon session, JGB futures are holding weaker, --21 compared to the settlement levels.

• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined Trade Balance and Jibun Bank PMIs. Tokyo Condominiums for Sale (Feb) data is due later, along with an Enhanced-Liquidity Auction for 5-15.5 year OTR JGBs.
• (Bloomberg) -- Governor Kazuo Ueda said the Bank of Japan saw the risk of potentially having to raise interest rates rapidly if it waited too long to end the bank’s massive easing program, a view that prompted the board to make that move on Tuesday. There was an option for the BOJ to wait much longer to completely confirm its stable inflation target had been achieved, but doing so would have greatly raised upside inflation risks, potentially forcing aggressive tightening, Ueda said Thursday in response to questions in parliament. (See link)
• The cash JGB curve has twist-flattened, pivoting at the 10s, with yields 1bp higher to 2bps lower. The benchmark 10-year yield is 0.1bp lower at 0.74% versus the YTD high of 0.801%.
• The swaps curve has bear-flattened, with rates 1-2bps higher. Swap spreads are wider.
• Tomorrow, the local calendar sees National CPI and Weekly International Investment Flow data, along with BoJ Rinban Operations covering 1-25-year JGBs.

AUSSIE BONDS: Yields Shunt Higher After Much Stronger Than Expected Jobs Report

ACGBs (YM -4.0 & XM -3.5) are 7-8bps cheaper after February’s Employment Reports printed way stronger than expectations: Total Employment change 116.5k (+40k est & +15.3k prior), Full-Time Employment change +78.2k (19.9k revised prior), Part-Time Employment change +38.3k (-4.6k revised prior) and the Unemployment Rate falls to 3.7% (4.0% est and 4.1% prior).

• February labour market data were expected to bounce given the ABS warned that data had been weak due to people taking time off between jobs over the holidays. But that bounce was a lot sharper than expected signalling that the labour market remains very tight.
• Given the noise, more months of labour data are needed to determine how tight market is easing plus it is also worth looking at averages.
• Cash ACGBs are 3-5bps cheaper after being 3-4bps richer earlier in the Sydney session. The AU-US 10-year yield differential is 5bps higher at -18bps after being at -25bps earlier.
• Swap rates are 5-6bps higher.
• The bills strip is cheaper, with pricing -3 to -6.
• RBA-dated OIS pricing is 6-9bps firmer for meetings beyond August. A cumulative 33bps of easing is priced by year-end versus 42bps before the release.
• Tomorrow, the local calendar will see the publication of the RBA Financial Stability Review.

NZGBS: Closed Richer But Well Off Best Levels, Negative Spillover From ACGBs Post-Jobs

NZGBs closed 1-4bps richer across benchmarks, but well off the session’s best levels after spillover from very strong Employment data in Australia. ACGBs currently sit 5-8bps cheaper than pre-jobs levels. NZGB benchmark yields were as much as 10-12bps lower early after the positive lead-in from US tsys following the FOMC meeting. Cash US tsys have extended the post-FOMC rally in today’s Asia-Pac session with the benchmarks dealing 1-2bps richer.

• Today’s weekly supply also potentially assisted the move cheaper through the session, after the cover ratios for the May-31 and Apr-33 bonds printed a relatively low 1.6x and 2.0x respectively.
• Spending on all cards rises 1.7% m/m (2.2% y/y) in February, according to the RBNZ.
• Swap rates closed 1-4bps lower, with the 2s10s curve steeper.
• RBNZ dated OIS has shunted lower with pricing 1-8bps softer across meetings. A cumulative 73bps of easing is priced by year-end.
• Tomorrow, the local calendar will see Trade Balance data for February.
• Before then, the market’s focus turns to Thursday's Weekly Claims, S&P Global US PMIs, Home Sales. Fed VC Barr fireside chat "View from the Fed", Q&A at 1200ET.

FOREX: Yen Off Lows, AUD Head Higher Post Strong Employment Data

• USD/JPY is now off multi-years highs made pre-FOMC of 151.82. We have traded lower all through the Thursday session after exports beat, and PMI increase from 50.6 to 52.3 prior. The pair now trades just of the earlier lows of 150.27 at 150.82.
• The yen is 0.29% higher for the day with focus now on initial support of 149.06/148.50 20- and 50-day EMA values, while initial resistance is 151.82 Mar 20 highs
• EUR/JPY is lower today tacking wider market moves lower, down 0.18% for the day at 164.92 while still up 1.90% for the past 5-days and just off levels not seen since Sept 2008. To the downside for the pair the next support level holds at 162.59 the 20-day EMA, while a reversal would be met with initial resistance from the overnight highs at 165.35, while above there the 166.00 round number resistance.
• NZD/USD has pushed higher throughout the day post FOMC and NZ GDP data, the pair now trades just below 0.6100 at 0.6092, a break and hold above 0.6100 would be needed to test the 200-day EMA at 0.6112, tomorrow NZ has Feb Trade Balance data
• AUD/USD similar to NZD has surged high post FOMC, while AU Employment smashed estimates earlier helping the currency push higher, the pair is now up 1.72% since the overnight lows of 0.6511 and now trades at 0.6623 with the next target now the March 14 highs of 0.6632. AUD/NZD is up 0.30% at 1.0865 as the pair looks to track the AU-NZ 2y swap higher.
• The main focus ahead will be US Current Account Balance & Job Claims, while Japan has CPI out On Friday.

OIL: Crude Buoyed By Rate Cut Prospects & US Inventory Drawdown

Oil prices have made up some of Wednesday’s losses during APAC trading. Technical selling had been triggered as crude flashed overbought but with the Fed not ruling out a cut in May/June and EIA data pointing to solid US fuel demand and lower inventories, fundamentals have driven crude higher again today. The USD index is down a further 0.2% today after -0.4% yesterday, which is supportive of dollar-denominated commodities.

• WTI is up 0.7% today to $81.81/bbl, close to the intraday high. It has been trending higher through the session. Brent is also 0.7% higher at $86.58.
• The Fed continues to expect three 25bp rate cuts this year which has helped risk appetite and improved the demand outlook for crude.
• EIA reported a US crude stock drawdown of 1.95mn barrels last week, more than expected and below the 5-year seasonal average. Gasoline inventories fell 3.31mn barrels while distillate rose 624k. Demand for fuel remains solid.
• Later the Fed’s Barr participates in a fireside chat and in terms of US data Q4 current account, jobless claims, preliminary March PMIs and Philly Fed are released. The ECB’s Buch appears and the BoE and SNB decisions are announced. European preliminary March PMIs print.

GOLD: Sharp Rise Post-FOMC To A New All-Time High

Gold jumped above $2200 for the first time after the FOMC meeting. The previous all-time cycle high of $2,195 was reached earlier this month.

• As expected, the Fed Funds rate target range was maintained at 5.25-5.5%. Revisions to the Fed funds path, as well as on the economy and inflation were all hawkish.
• However, the dot plot continued to show three expected rate cuts this year while for 2025 the number of cuts expected was reduced from four to three.
• Also, Fed Chair Powell said "the story is the same one," meaning rate cuts are still on the cards and the Fed is confident it will achieve its objectives over time.
• Currently, bullion is 0.8% higher in the Asia-Pac session at $2202.66, after closing 1.3% higher on Wednesday.
• The USD index reversed roughly 0.7% lower from its intra-day highs as a May/June Fed cut was not categorically ruled out.
• According to MNI’s technicals team, the trend condition in gold is bullish and having cleared previous resistance at $2135, sights are on $2206.6 next, a Fibonacci projection.

EQUITIES: Asian Equities Push Higher Post FOMC, Tech Surges

Regional Asian equities are higher today, reacting positively to the Fed Reserve's policy decision maintaining its outlook for three rate cuts this year. It's been a busy morning on the data front, with NZ GDP, Japan Trade Balance & PMI, Australia Employment Data, and South Korea Import/Export Data. Tech stocks are surging higher as a dovish FOMC and strong revenue forecast from Micron Technology help push stocks higher.

• Japan is back from their public holiday on Wednesday, and equities are surging higher up. The yen cheapened on Wednesday and with equites closed they are now playing catching up, exporters, especially autos are trading well with the lower yen, while data out earlier showed exports growing at 7.8% in Feb vs 5.1% expected marking the third straight month of growth. The Nikkei 225 is up 1.96% lead by Consumer Discretionary and Tech stocks, the Topix Bank Index is up 2.86% while the wider Topix Index is 1.58% higher
• South Korean trade data was out earlier showing exports had risen 11.2% in March up from -7.8% in Jan, while imports were -6.3% vs -19.2% in Jan. The Kospi is up 2.33% and now back at the highest levels in almost 2 years. Chip stocks are surging after Micron Technology surged overnight after giving a strong revenue forecast, while the FOMC decision was in line with expectations helping tech stocks.
• Taiwanese equities are also benefiting from the FOMC meeting and high global Chip stocks, the Taiex is up 1.93%. Late on Wednesday Taiwan Export orders missed expectations coming in at -10.4% vs 1.2% expected, export to China and the US were the biggest detractors although some of that can be put down to LNY, while more importantly to Taiwan demand for new tech applications continued to rise, offsetting part of the overall decreases.
• Australian equities closed up 1% today after employment data showed a massive beat verses expectation coming in at 116.5k vs 40k, with 78.2k of that in full-time work. Financials are the top-performing sector, while healthcare drags. The ASX200 %
• Elsewhere in SEA, New Zealand GDP missed, coming in at -0.3% vs 0.0% expected, equities are up 0.70%, while EM Asian equities surge higher on a dovish FOMC, Singapore Equities are up 1.10%, PSEi up 0.86%, Nifity 50 up 1%, Thailand equities have two their two largest days of net foreign sellers in what now seems likely that a Institutional Fund has left the market and a domestic accounts have easily absorbed the size as the SET trades up 1.00%, while Malaysian equities lag the market somewhat up just 0.24%